All investing is really about predicting electoral results and the consequent interference in the marketplace by governments on behalf of corporations. You’re competing against Congressmen who can invest based on insider knowledge of the laws they are crafting and lobbyists who are deeply involved in the process. I will suggest, politely, that you are on the bottom of the information pyramid. So my advice:
Never, ever try to pick stocks.
Regardless of your situation, abilities, or obsession with money, there are a set of basics that everyone should be aware of for managing personal finances. This is the first post in a series on the very basics for being mostly okay with your money. Or at least better than you currently are.
This is really some very beginner-level stuff, so if you think these things are common sense - congratulations, you’re on the road to competency.
Lesson One: Bank Accounts
Your bank account(s): know how much is in it. Know what transactions are going in and out of it.
I have a friend who shall go unnamed, but this person can go months without looking at his/her bank account balance. This person is also very frugal, so that is probably the only reason why the whole don’t-check-my-bank-account plan hasn’t blown up (yet). This person is otherwise wonderful, and has often endured my eyebrow raises and berating about just taking a peek at that bank statement once in a while.
How often should you check your bank account?
If you’re an obsessive weirdo like me, check it at least three times a day. If you’re a relatively normal person, it’s best to log on and check it weekly - and you should probably check it at least every three days or so if you’re traveling. At an absolute minimum, at least look at the bank statement once a month. For the love of god.
What am I looking for when I check my bank account?
For one, you’re going to look at the balance. Is it what you thought it would be? Is it higher or lower, and why? Don’t look at your account and assume that just because there’s money there, that you have money to spend. Think about pending transactions - checks you wrote, recurring deductions, or even the $50 you owe to the dry cleaner to get the clothes you need to wear to work next week.
One of the biggest pet peeves from when I was the finance manager for my sorority was the number of ladies who would whine about me not depositing their checks right away (I went to the bank once a week to deposit checks). If you can’t wait seven days for a transaction to hit your account, you’re probably setting yourself up for some nasty surprises.
The next thing you should do is to perform a scan of the transactions that have occurred since you last checked your account. Is there anything you didn’t expect to see? Does it look like it came from a weird place? Any unexpected fees? You might want to look in to that. If you don’t check your bank account on the regular, that sucker is going to be ripe for identity theft faster than you can tell me what “NSF” stands for.
Figure out what the different numbers mean.
My sister once checked her bank account and thought that she had $200 she didn’t know about. She didn’t realize that if the number is in parentheses, that means it’s negative. She didn’t figure that out until she got smacked with a few NSF fees. Oops.
For bank accounts, credits = more money, debits = less money. This is the opposite of normal accounting and there’s a reasonable explanation for that, but you’re probably not interested in learning about the basic accounting equation and its relation to the bank’s accounting records. Credits will be represented by either a plain number or a number with a “+”. Debits will be represented by either a number in parentheses - $(100) - or a number with a “-“. Summations will be bolded, double underlined, or both.
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Congratulations, you’re on your way to being a competent human being.
USAA just updated its app.
It has a loan calculator tool.
Now I can obsess on the go!
View Larger So…I’m an idiot for not taking care of this before I went on vacation. I have about $45K in Student Loan debt, and being late never helps. But I don’t set up automatic debit, because I’m paranoid about delays in my paycheck. See, a while back I changed jobs and human resources screwed up paying me. Everything that was scheduled to pay on my payday bounced back, which lead to a bunch of really annoying calls with all the people I’d promised to give money to. Like, you know, utility companies.
Having a scheduling system for money is crucial. You need to understand not only what your bills are, or how much they are, but WHEN they are. I’m going to get into the time value of money in a future post, but step one is understanding how important timing is. Paying your bills is about constructing a powerful mechanism for allocating money on certain dates. And so is using credit.
Haaay.
I am here to write about personal finance, but less about the issues of wealth or lack thereof, but more about management, even when you have very little.
A bit about my background…I have a job, a family and not a lot of cash. Circumstances related to employment, unemployment and then underemployment have put me in a financial position of making do without a lot of anything.
I have Medicaid and Food Stamps/WIC.
Regardless, I meet my budget, pretty much, each month, and manage to pay all of my bills, which includes a pretty hefty mortgage.
I plan on talking about how this works and hope I don’t depress y’all that much.
Debt is a really dumb way to think about how rich you are. A lot of advice columnists will reflexively tell you to pay off debts - sound advice generally - but the reality is that thinking of your relative wealth as merely assets minus liabilities is asinine. That’s Republican-talk, and I won’t fucking have that shit on a blog that someone else inexplicably lets me use.
A lot of those people like to show you how your debt makes you worth less in fiscal terms than a man on the street. This is because they know addition, and subtraction. They know fuck-all else.
Your income is, for most of us, your primary financial asset. A lot of people live paycheck-to-paycheck; that’s bad. That is why every advice columnist tells you to pay off debt. Assets aren’t just something you have on paper. Your education - however much you have - is an asset. Good health goes on a side of the ledger. Good feelings do too, believe it or not. Intangibles matter. So does the fact that you probably have the internet and a warm place to stay if you’re reading this.
The first and most important thing you have to do in personal finance is be honest with yourself. You probably know if you spend too much, deep down. You don’t need a blog to Dr. Phil you into a debt-free lifestyle; everyone who’s ever taken on debt knows that repaying it matters. But what a lot of people don’t understand is that “dollars and sense” is also about have the fucking brains to account for the intangibles.
Most of the intangibles are probably good, if you can see this. You’re not on the street - and if you are I sincerely hope we can remedy that quickly - and you’re not dead. It’s possible you have financial problems; you’re not alone. We’re going to work on turning that negative number into a slightly more positive one, but the first aspect of getting better is understanding that the best things in life are free. Moving in a positive direction isn’t just a financial decision.
Remember that when I’m teaching you to spend your Saturday tossing quinoa in tupperware to cut down on your food expenses.
View Larger Let’s start this party right with a healthy dose of oversharing.
As you can see from the chart above, I am screwed. Over the course of this last year, I’ve been slowly attempting to un-screw myself.
The horizontal axis represents the month I measured how screwed I am. I’ve been doing analyses of screwedness on a quarterly basis (you can read each month as being during the first week of that month, as a look-back to measure the prior fiscal quarter). I also did one today.
The vertical axis represents how screwed I am, i.e. just how deep in debt I am drowning. Bet you didn’t know that even accountants can be hairline-deep in debt, too! The only difference is probably the level of obsessiveness with which I track how screwed I am using spreadsheets.
I’m not even going to bother with net worth at this point, suffice to say that it is NEGATIVE.
So how does a jerk like me end up with so much damn debt? I will show you how!
There you have it. Thirteen steps to be an irresponsible twat who eventually stops with the idiocy.
I’ll explain more about how I’ve been un-screwing myself later.
So two pessimistic finance/accounting jerks (theCallus and Misanthropologie) have decided to get together to complain about the economy and bitch about personal finances.
Content pending. Questions go here if you’ve got them.
Sit back, relax, and imagine that Suze Orman had a baby with George Carlin.
Update: the venerable -Rosasparks- has also joined the fun.
